Royalties (NFT)
An automatic payment to the original creator of an NFT each time the NFT is resold on a secondary market. Royalties are typically set between 2.5% and 10% of the sale price. While early NFT platforms enforced royalties on-chain, many newer marketplaces have made them optional, sparking debate about creator compensation.
“If an artist sets 5% royalties on their NFT collection and a piece resells for $10,000 on OpenSea, the artist automatically receives $500. However, some marketplaces now allow buyers to skip royalty payments.”
NFT (Non-Fungible Token)
A unique digital token on a blockchain that represents ownership of a specific item — such as art, music, collectibles, virtual real estate, or in-game items. Unlike fungible tokens like BTC or USDC where each unit is identical, each NFT has a unique identifier making it one-of-a-kind. NFTs typically follow the ERC-721 or ERC-1155 token standard and store metadata pointing to the associated content.
Smart Contract
Self-executing programs stored on a blockchain that automatically enforce the terms of an agreement when predetermined conditions are met. Smart contracts enable trustless transactions without intermediaries because the code, once deployed, executes exactly as written and cannot be altered (unless specifically designed to be upgradeable). They form the foundation of DeFi, NFTs, DAOs, and virtually all dApps.
ERC-721
The Ethereum token standard for non-fungible tokens (NFTs). Unlike ERC-20 tokens where each unit is identical, each ERC-721 token has a unique identifier making it one-of-a-kind. The standard defines functions for transferring, approving, and querying ownership of individual tokens, enabling digital art, collectibles, and unique digital assets.